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College of Education, Arts and Sciences

Course Title: The Contemporary World Professor: Dr. Eder E. Magsayo

Course Code: Date of Submission:
Schedule of Class: Student Number
Module 3: Economic Globalization: Drivers Student Name:
of economic globalization

Learning Objectives:
By the end of this lesson, the student will be able to:
1. Recognize and describe the primary drivers of economic globalization, including
technological advancements, trade liberalization, capital market integration, and the
rise of multinational corporations.
2. Assess the impact of technological advancements, such as ICT, transport technology,
and the internet, in facilitating global trade, communication, and the integration of
economies.
3. Understand the effects of trade liberalization policies, such as tariff reductions and free
trade agreements, on the expansion of international trade and economic
interdependence.
4. Explore how the integration of global capital markets has driven economic globalization
by enabling cross-border investment and the flow of capital between countries.
5. Analyze the role of multinational corporations in driving economic globalization
through global production networks, foreign direct investment (FDI), and the creation
of global supply chains.

1. Technological Advancements
2. Trade Liberalization
3. Capital Market Liberalization
4. Global Governance

Technological Advancements: ICT, Transport Technology, and the Internet

1. Information and Communication Technology (ICT)

a. Global Connectivity
Advances in ICT, including the development of computers, mobile phones, and
satellite communication, have revolutionized the way people and businesses
communicate globally. The internet, in particular, has enabled instant communication
across borders, facilitating everything from simple email exchanges to complex global
business transactions.
b. E-Commerce and Digital Trade
ICT has enabled the rise of e-commerce, where businesses can sell goods and
services to customers worldwide through online platforms. This has expanded market
access for businesses, particularly small and medium-sized enterprises (SMEs), and
increased consumer choice.
c. Outsourcing and Offshoring
ICT has allowed companies to outsource and offshore various business
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processes, such as customer service, software development, and manufacturing, to

countries where labor and operational costs are lower. This has created global supply
chains and increased economic interdependence.
d. Innovation and Knowledge Sharing
The ease of communication and information exchange has accelerated the pace
of innovation and the spread of new technologies, making it easier for businesses to
collaborate globally and adopt best practices.

2. Transport Technology

a. Containerization
The development of containerization in shipping has drastically reduced the cost
and time of transporting goods across the world. Standardized containers allow for the
efficient loading, unloading, and transfer of goods between ships, trucks, and trains.
b. Air Freight
Advances in air transport have made it possible to move goods and people
quickly across great distances, supporting the growth of global trade, tourism, and
business travel.
c. Logistics and Supply Chain Management
Improved logistics technologies, including real-time tracking and automated
warehousing, have optimized global supply chains, ensuring that products can be
delivered more efficiently and at lower costs.
d. Global Infrastructure Development
Investments in global transport infrastructure, such as ports, highways, and
airports, have further facilitated the movement of goods and services across borders.

3. The Internet

a. Digital Transformation
The internet has transformed industries by enabling digital business models,
such as online marketplaces, social media, and cloud computing. This digital
transformation has made it easier for businesses to operate globally.

b. Global Information Flow

The internet has democratized access to information, allowing people worldwide
to access and share knowledge. This has supported the global spread of ideas, culture,
and innovation.
c. Virtual Workspaces
The internet has enabled the rise of virtual workspaces, where teams can
collaborate online across different countries and time zones. This has increased the
flexibility and scalability of global operations.
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Trade Liberalization: Reduction of Trade Barriers, Free Trade Agreements

1. Reduction of Trade Barriers
Tariff Reduction
Over the past several decades, many countries have reduced tariffs (taxes on
imports) to encourage international trade. Lower tariffs make foreign goods cheaper
for consumers and allow domestic businesses to compete in global markets.
Non-Tariff Barriers
In addition to reducing tariffs, countries have worked to eliminate non-tariff
barriers, such as import quotas, subsidies, and restrictive regulations. By doing so,
they have facilitated the free flow of goods, services, and capital across borders.
Customs Procedures
Simplified and harmonized customs procedures have made it easier and faster to
trade across borders, reducing the cost and complexity of international trade.
2. Free Trade Agreements (FTAs)
Bilateral and Multilateral Agreements
Free trade agreements between two or more countries have played a significant role in
trade liberalization. These agreements remove or reduce trade barriers and promote
economic integration. Examples include the North American Free Trade Agreement
(NAFTA), now replaced by the United States-Mexico-Canada Agreement (USMCA), and
the European Union's single market.

Regional Trade Agreements

In addition to bilateral FTAs, regional trade agreements, such as the Trans-Pacific
Partnership (TPP) and the African Continental Free Trade Area (AfCFTA), have sought
to create larger, integrated markets by reducing trade barriers among member
countries.

World Trade Organization (WTO)

The WTO, established in 1995, has been instrumental in promoting global trade
liberalization through multilateral trade negotiations. The WTO provides a framework
for negotiating trade agreements and resolving trade disputes between member
countries.

Capital Market Liberalization: Financial Deregulation, Cross-Border Capital Flows

1. Financial Deregulation
Liberalization of Financial Markets
Many countries have deregulated their financial markets, allowing for more open and
competitive environments. This has included the removal of restrictions on foreign
investment, the privatization of state-owned enterprises, and the relaxation of capital
controls.

Global Financial Integration

Financial deregulation has facilitated the integration of national financial markets into
a global financial system. This has enabled the free flow of capital across borders,
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allowing investors to diversify their portfolios internationally and companies to raise

capital more easily in global markets.

Innovation in Financial Products: Deregulation has also led to the creation of new
financial instruments, such as derivatives, which have increased the complexity and
interconnectivity of global financial markets.

2. Cross-Border Capital Flows

Foreign Direct Investment (FDI)

FDI, where investors acquire a significant stake in foreign companies, has increased
dramatically due to capital market liberalization. This has allowed businesses to
expand internationally and has facilitated the transfer of technology and skills to host
countries.

Portfolio Investment
In addition to FDI, portfolio investment, where investors buy stocks, bonds, and other
financial assets in foreign markets, has become a significant component of cross-
border capital flows. This has provided countries with access to foreign capital, but
also increased their exposure to global financial volatility.

Remittances
Migrant workers sending money back to their home countries is another form of cross-
border capital flow. Remittances have become an important source of income for many
developing countries.

Global Governance: Role of International Institutions like IMF, World Bank, WTO

1. International Monetary Fund (IMF)

Global Financial Stability
The IMF was established to promote global monetary cooperation, secure financial
stability, and facilitate international trade. It provides short-term financial assistance
to countries facing balance of payments problems, helping to stabilize their economies.
Economic Surveillance
The IMF monitors the global economy and provides policy advice to member countries.
Its surveillance activities help identify economic risks and promote sound economic
policies.
Technical Assistance and Capacity Building
The IMF provides technical assistance and training to member countries to help them
strengthen their economic institutions and implement effective policies.

2. World Bank
Development and Poverty Reduction
The World Bank’s primary mission is to reduce poverty and support development in
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low- and middle-income countries. It provides long-term loans and grants for projects
that improve infrastructure, education, health, and other critical areas.
Global Public Goods
The World Bank also works to address global challenges, such as climate change,
pandemics, and food security, by funding projects that provide global public goods.
Capacity Building
The World Bank offers technical assistance and expertise to help countries implement
effective development strategies and build the institutions needed for sustainable
growth.

3. World Trade Organization (WTO)

Promoting Free Trade
The WTO is the global body responsible for regulating international trade. It provides a
framework for negotiating trade agreements and works to ensure that trade flows as
smoothly, predictably, and freely as possible.
Dispute Resolution
The WTO’s dispute resolution mechanism allows member countries to settle trade
disputes in a structured and legal manner. This helps to prevent trade conflicts from
escalating into larger economic or political issues.
Trade Facilitation
The WTO works to reduce trade barriers and create a more open trading system by
encouraging member countries to adopt transparent and non-discriminatory trade
policies.

Learning Tasks:
1. Each group will choose only 1 task/activity below. Read the problem/scenario and
accomplish task.

1. Virtual Tour Design Project: Leveraging ICT in Tourism

Activity: Students will design and create a virtual tour of a popular tourist destination using
ICT tools like 360-degree cameras, VR software, or online platforms.

Objective: Understand how ICT is transforming the way tourists experience destinations
and how it can be used to enhance the tourism industry.

Task: Each student or group will select a destination, research its key attractions, and
develop a virtual tour that includes multimedia elements (e.g., videos, images, narration).
They will present their virtual tours to the class and discuss how such technology can attract
and engage tourists.

2. Interactive Discussion: The Impact of Low-Cost Airlines on Global Tourism

Activity: Facilitate an interactive class discussion on the rise of low-cost airlines and their
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influence on global tourism patterns.

Objective: Analyze how advancements in transport technology, particularly low-cost

carriers, have democratized travel and reshaped the tourism landscape.

Task: Students will research the history and business models of major low-cost airlines,
such as Ryanair or AirAsia, and discuss their impact on tourism, including increased
accessibility to distant destinations, the growth of short-term travel, and challenges faced by
traditional airlines. They will also consider the environmental implications of the rise in air
travel.

3. Scenario Analysis: Ethical Issues in Technology-Driven Tourism

Activity: Students will analyze scenarios that present ethical dilemmas related to the use of
technology in tourism, such as privacy concerns with data collection or the environmental
impact of transport technology.

Objective: Critically examine the ethical implications of technological advancements in the

tourism industry.

Task: Each group will search a scenario where they must identify the ethical issues
involved, discuss potential consequences, and propose solutions that balance technological
benefits with ethical considerations. They will present their findings and engage in a class
discussion on how the tourism industry can address these challenges responsibly.

Your Output:
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